Jan. 17 (Bloomberg) -- China’s urban population surpassed
that of rural areas for the first time in the country’s history
after three decades of economic development encouraged farmers
to seek better living standards in towns and cities.

The world’s most-populous nation had 690.79 million people
living in urban areas at the end of 2011, compared with 656.56
million in the countryside, the National Bureau of Statistics
said today in Beijing. That puts the number of people residing
in China’s towns and cities at double the total U.S. population.

China’s urbanization has accelerated since Deng Xiaoping
introduced capitalist reforms in the late 1970s, lifting more
than 200 million people out of poverty and transforming the
nation into the world’s second-largest economy and its biggest
consumer of steel, copper and coal. That migration may have
decades more to run, diluting an agrarian economy that was once
the ruling Communist Party’s power base.

“Urbanization has been a fundamental driver behind China’s
economic growth,” said Chang Jian, an economist at Barclays
Capital in Hong Kong who formerly worked for the Hong Kong
Monetary Authority and the World Bank. “Urbanization in China
still has a long way to go, maybe for another 20 years.”

China’s rural population fell as a proportion of the
nation’s total to 50.05 percent in 2010 from 81 percent in 1979,
as reform fueled a more than 90-fold increase in the economy
during that time. During the first three decades of Communist
Party rule, that proportion declined by less than 9 percentage
points from 89.36 percent in 1949.

21st Century

Nobel economics laureate Joseph E. Stiglitz has cited
urbanization in China, along with technology developments in the
U.S., as the two most important issues that will shape the
world’s development during the 21st century.

With more urbanization and industrialization ahead of it,
China still needs investment to upgrade its industries and
infrastructure, Ma Jiantang, commissioner of the National Bureau
of Statistics, said today in a briefing in Beijing.

Income Gap

Income for the nation’s city dwellers is more than triple
that of its rural residents. Per capita urban disposable income
increased 8.4 percent in real terms last year to 21,810 yuan,
according to the statistics bureau. By the same measure, per
capita rural cash income increased 11.4 percent to 6,977 yuan,
according to the agency.

The statistics bureau doesn’t provide disposable income
statistics for rural residents because much of their annual
earnings aren’t in cash, such as food they grow themselves.

Income growth for rural residents outpaced that for people
in towns and cities in 2011 for a second consecutive year. Rural
income grew faster in 2010 for the first time since 1997.

China’s rural poor have been the source of revolution
throughout the nation’s history. Mao Zedong’s Communist Party
took power in 1949 after winning the support of hundreds of
millions of peasants living in the nation’s countryside. After
the Communists’ victory, Mao redistributed land from rich
landlords to penniless peasants.

As the nation’s urban population surges, China now faces
the challenge of providing jobs, welfare and other social
services to its city dwellers, Zheng Zhenzhen, a professor at
the Institute of Population and Labor Economics at the Chinese
Academy of Social Science, said by telephone today.

“One of the government’s top priorities now is to look
after the lowest rungs of the urban population,” Zheng said.